Banking and Finance Law Daily Consumer alleging mere procedural FDCPA violation lacks Article III standing
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Wednesday, June 5, 2019

Consumer alleging mere procedural FDCPA violation lacks Article III standing

By Nicole D. Prysby, J.D.

A consumer who alleged that a debt collection letter failed to specify that she had to communicate in writing to trigger FDCPA protections suffered no Article III injury because she did not allege that she tried to dispute her debt orally.

Where the only harm suffered by a consumer was that a debt collection letter failed to specify that she had to communicate in writing to trigger the statutory protections of the Fair Debt Collection Practices Act, the consumer had no Article III standing to bring an FDCPA claim, held the Seventh Circuit Court of Appeals. She did not allege that she tried to dispute or verify her debt orally and therefore lost or risked losing the statutory protections. Although Congress has authorized a plaintiff to sue a debt collector who fails to comply with any requirement of the FDCPA, for Article III standing there must be an appreciable risk of harm to the interest Congress sought to protect: a consumer’s interest in knowing her statutory rights. Because the consumer did not allege that she tried to dispute the debt, she suffered no harm to that interest (Casillas v. Madison Avenue Associates, Inc., June 4, 2019, Barrett, A.).

Background. The defendant debt collector sent a debt collection letter to the consumer that described the FDCPA process for verifying a debt but failed to specify that she had to communicate in writing to trigger the statutory protections. The consumer noticed the omission and filed a class action lawsuit. She did not allege that she tried to dispute the debt, only that the debt collector’s failure to notify her of the writing requirement was a material breach of her rights under the FDCPA.

Consumer has no standing under FDCPA. The consumer has no Article III standing because she did not allege that she tried to dispute or verify her debt orally and therefore lost or risked losing the statutory protections. There was no risk of harm: she was not at any risk of losing her statutory rights because there was no prospect that she would have tried to exercise them. The consumer also failed to allege any harm to the interest protected by the FDCPA. Unlike the Fair Credit Reporting Act, the FDCPA provisions that the defendant violated do not protect a consumer’s interest in having an opportunity to review and respond to substantive information. They instead protect a consumer’s interest in knowing her statutory rights. The court also rejected the consumer’s alternative theory, which was that she suffered a concrete harm in the form of "an informational injury." But the court noted that the precedent she cited, which relates to a lack of disclosure of public information and denial of information subject to public disclosure, is one of the intangible harms that Congress has the power to make legally cognizable. Here, the plaintiff alleged no risk of harm to knowing her FDCPA rights.

Additional opinion. Chief Justice Wood and Justices Rovner and Hamilton dissented from the court’s denial of en banc consideration. The opinion in this case creates a conflict with the Sixth Circuit, which has held that bare procedural violations of the FDCPA confer standing. The panel circulated the opinions to all judges in the Seventh Circuit and asked whether this is an important enough issue to warrant plenary consideration by the en banc court. A majority answered that question in the negative. The dissenters would have had an en banc court develop a clear test to distinguish between statutory protections that create, on the one hand, a "bare procedural injury" that does not support standing, and, on the other hand, statutory protections for the type of concrete, particularized, and actual or imminent injury that meet Article III standards. The dissenters also would have concluded that the consumer suffered sufficient harm in the form of an imminent risk of losing the protections in the FDCPA.

The case number is No. 17-3162.

Attorneys: John G. Albanese (Berger & Montague, PC) for Paula Casillas. James R. Branit (Litchfield Cavo LLP) for Madison Avenue Associates, Inc.

Companies: Madison Avenue Associates, Inc.

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